The Big Switch: My Thoughts On Electric Orange After Moving My Primary Checking Account There

About a month ago, I switched my primary checking account from my local brick and mortar bank to ING Direct’s Electric Orange online checking.

What is Electric Orange?

Electric Orange is an online-only checking account offered by ING Direct. In short, that means you do all of your checking account business either online or with a debit card. For some people, this sounds like complete craziness, but bear me out.

What’s Good?

A 4.0% APY interest rate This checking account earns an interest rate higher than inflation. My average checking account balance over 2006 was just north of $4,000. In this account, that’s an earnings of $160, just for having Electric Orange.

A strong fee-free ATM network My ATM card has no fees if I use an ATM in the AllPoint network, which has several locations nearby and apparently has one in all Target stores. My previous bank had an extremely limited fee-free ATM card network.

An overdraft line of credit Instead of incurring a big fee if you overdraft, the account instead offers a line of credit and they just begin charging you interest on that credit line. The credit line seems to be set differently for different people depending on their initial deposit and any balances they might have in other ING Direct accounts, but the interest rate on the line is 12.25%. Thus, if you accidentally overdraft your checking, instead of charging you a big fee (my old bank charged $40), you just start owing interest on the amount that you overdrafted. If you deal with it quickly, it’s just a few pennies.

Extremely user friendly online banking ING Direct has very good customer service and the best overall online banking interface I’ve used. Online bill pay with them was incredibly easy – I was paying my bills online very quickly and it all worked smooth as silk, even to rather local institutions like the local telecommunications cooperative.

What’s Bad?

No paper checks This is probably the worst drawback, but so far it hasn’t been as bad as I feared. I left my old account open with about $100 in it for small incidental checks (the nearest grocery store to my residence only accepts cash and checks from local banks as payment). For other checks, the online interface allows you to fill out a form that looks like a check and then they will mail you a check first class the following day. For me, I receive the check about four postal days after filling out the form online. This works for some larger check situations, but it’s not the most flexible system in the world. So far, it has worked fine for me, but I can envision a situation or two that might cause me trouble.

No branches The biggest reason for this for me was that my local bank allowed me to deposit pocket change directly into the account using their counting machine. Thus, I would save up pocket change in a jar for several months, then deposit it all at once. By keeping the old account, I retain this service. Other than this service, I never used a branch, so for me, this issue with Electric Orange is basically nonexistent.

Am I Going To Stick With It?

I have been very happy with ING Direct’s online savings in the past in terms of customer service and their nice interest rate, so it was a no-brainer for me to give this a try. So far, I love the account. I haven’t been hit with a single fee of any kind as of yet (and they used to come in all the time with my old bank) and I’ve earned a pretty nice little piece of interest. If you figure the losses on the fees at my old bank (and the lack of interest) versus the lack of fees at this bank and the solid interest rate, it is a very good deal.

What about a recommendation? If you’re comfortable with online bill pay, then this is the type of checking account you should be moving to. If you prefer to write checks for your bills, then this account will cause you much frustration and isn’t worth it. The online bill pay factor is really the deciding factor here.

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  1. mh says:

    I’ve had an Electric Orange Account for awhile. My original intention was to keep the EO account at a very low amount and if I ever needed funds from my high-interest savings with ING, I could easily do a transfer (ING Savings to EO transfers immediately) and hit an ATM. That allows me to overcome to 5-or-so day delay in moving money to my B&M from ING and back.

  2. jon says:

    i’ve been a big fan of electric orange in nyc, they have a ton of free atms. it works great in conjunction with a bofa checking i already have. id say keep any original checking account you have and keep enough to avoid fees, the transfers are quick to ing

  3. lori says:

    I have recently started on-line savings accounts (HSBC and Emigrant) and I have found them to be easy, useful and more rewarding than traditional savings accounts. I am looking into on-line checking right now. I appreciate your comments about ING Direct. I am curious as to what your initial thoughts are regarding Schwab’s free checking, interest yielding account, advertised at schwab.com.

  4. GeekMan says:

    Longtime reader, first-time commenter.

    I have two main concerns with online checking accounts and since you seem very knowledgeable about them I thought this was as good a time as any to come out of my lurking cave. First; if you did not have any way to do direct deposit (freelancer, part-time worker, etc.) how then would you rate the convenience and desirability of these online checking accounts? Second; I understand that there are no ATM fees from ING, but what about fees originating from the institution who controls the ATM machine? Another bank, a hotel, the store it’s located in? Usually, when you use your own bank’s ATMs there is no fee, but if you use another bank’s ATMs you are charged SOMETHING for it.

    And thank you for this great website. It’s an awesome resource for anyone interested in personal finances, even if they aren’t in any financial trouble themselves and just want to learn.

  5. booket166 says:

    I also recently switched to using Electric Orange as my primary account. I’ve only written one check since August, so I won’t really miss the check writing feature.

    I so need a check next weekend, so I ordered it last week, but it hasn’t arrived yet. Next time, I will probably transfer the money into my Bank of America account and write a check the old-fashioned way.

    Even with this downside, I think it’s great that my checking account earns 4%, gives me a debit card, and easy access to ATMs.

  6. Anne says:

    ING sounds great, so I just want to throw out another, very similar option which DOES include paper checks: EverBank (http://www.everbank.com). This is the bank I do checking with and it’s all free, free, free.

    It pays interest on checking also, from 3-5% depending on your balance, and right now is doing 6% for your first three months.

    It too offers an overdraft line of credit. Mine’s $250, this may vary.

    It doesn’t have an ATM network, but you can use any ATM and they will reimburse you the transaction fee (Up to $6/month). So that’s generally 3 cash withdrawals free per month which may not work for some, but I rarely pull out cash so it’s fine for me. Of course you can always just get cash back on debit purchases to avoid this.

    So far I’ve been really satisfied with them. Again, just an alternative for those who want checks.

    The only drawback is that you need $1500 to open, but I just pulled this out of my savings account and have let it sit in this account during the 6% period. Note that it does NOT require you to KEEP a minimum balance though.

  7. Sam says:

    I, like the previous commenter, have just opened an online savings account at HSBC. I’ve been thinking about making the switch for my checking account to an online provider as well. Good article.

  8. Pete says:

    We’ve had an ING Savings account for some time now…love watching that interest rack up on our emergency fund and replacement savings!

    We just signed up for the Electric Orange checking, and will be keeping our B of A checking account for the reasons that folks have noted above.

    I’m looking forward to seeing some interest income rack up on our checking account now. We try to keep one month’s basic expenses in checking (very accessible…the rest has been in ING Savings), above our monthly budget, so it’ll be nice to have that money working a little harder for us.

    Pete

  9. KMull says:

    Didn’t Charles Schwab recently offer a checking account paying really good interest?

  10. Ed says:

    I have just set up an EO account. I thought I would try it out, submitting 1/2 of my mortage payment to them every two weeks and have it electronically sent to the mortage company every month. When I have the 13th payment accumulated in the account, I will make that one extra month payment. I originally did this due to the fact that when I refinanced to a 15yr mortgage with Wachovia they do not have an electronic payment system set up to pay the mortgage from my primary checking (I do not have any other accounts with Wachovia).
    I do like the interest with EO, my CU is paying in the neighborhood of 1.5%
    EO is a bit speedier with the deposit showing up and earning interest compared with HSBC.

  11. Maryanne says:

    I’m thinking of opening an EO account. I send all paper checks and do not have an understanding of paying electronically since I’ve never done it. If I want to pay things electronically, how do I know the electric or mortgage companies’ routing number to send them an electronic check? I don’t truly understand the system of how I pay for things electronically and get the check to the company,

  12. Carl says:

    Now that i’ve seen schwab checking, I cant decide which to open, electric orange or schwab checking. Not to mention, I haven’t opened a trading account yet anywhere (my employer uses Fidelity for my 401K, but I want to open a ROTH IRA someplace)
    @Trent –> What would you recommend for a trading/investing (schwab/etrade/ameritrade..ING (yes they have some), and compare ING checking vs. Schwab Checking.

  13. Toby says:

    BofA uses Yodlee for their e-Bills. 95% of my bills are sucked straight into my BofA account electronically and I can pay them with a few clicks. No searching around for amount owed, date due, etc. I don’t think I can live without that convenience.

    Sorry Electric Orange…

  14. MikeVx says:

    Maryanne: For any on-line bill payment system, you add people/companies you want to pay, with account numbers where applicable, and the service handles the fiddly bits for you. Most large companies have arrangements with the on-line payment processors. When there is no electronic arrangement, the service mails a check on your behalf to the person/company.

    Trent: While Electric Orange is a nifty idea, it has the killer flaw of having a debit card attached to it. This makes the account unusable for any other purpose. At some point, your debit card will be scammed, and while ING may cover the bad charges, you may have problems with those persons/organizations who had failed payments because your OLOC wasn’t enough to cover the scammers spending. It is always a bad idea to have a debit card on the same account you pay household bills with. I have separate accounts for my debit cards, one I’ve had for a while, and EO is new for redundancy.

  15. Bill McClure says:

    This was a great checking account. I say “was” because apparently, after hyping the Electric Orange account via e-mail and a number of postal mail blasts to existing Orange Savings customers, ING thought better of their offering and decided to exercise their rights outlined in the very small fine print of the disclosure agreement; checking the credit scores of those they invited to open an account 60 or more days after opening them.

    I received an e-mail from ING yesterday at 4pm informing me that they had obtained my credit score from a consumer reporting agency and had decided to close my Electric Orange account and reduced my overdraft line of credit to $0.I was, however invited to re-apply after a 30 day wait. I called the customer service line to protest advising them that I had been a long term customer since 2003, had used my overdraft only three times and had paid it back promptly, even before the payment was due. I also reminded the representative that I had a regular deposit which was coming directly from my paycheck, all to no avail. They had made a decision and had no intention of reversing it, despite the fact that their major pitch in advertising the Electric Orange account was that they would not, in their own words, “Ding your credit with an inquiry”.

    The representative placed me on hold to speak further with a manager, and left me there. I hung up and redialed as I decided to close all of my accounts with ING. I got another representative who explained that the institution had recently decided to exercise its right under the disclosure agreement and run credit checks across the board. I assume they decided that they had openened themselves up to a great deal of financial risk by giving everyone who opened an account an open ended $165 line of credit. I pity the individual who came up with that idea. In hindsight, I suppose I was naive in thinking that a bank as large and profitable as ING could be successful offering such an “unsecured” product. Needless to say, I have decided that this across the board decision, along with the 3-4 business day delay in moving money between linked accounts, and the additional delay in crediting “good” funds received from an electronic deposit, is a little more than I am willing to put up with as a good customer.

    I have closed my ING accounts and transferred my money to an institution that treats its customers with a little more respect and courtesy than what they afforded me in this situation. I doubt that my little piece of business will make much of a dent in their profitable operation, but I feel an obligation to let everyone know about what I consider to be a dirty, underhanded trick.

  16. Sarah says:

    Bill–I received the same email at the end of last week, called customer service, and the gentleman that answered, while very polite, had absolutely no answers for me except to say that it was a “soft” credit check (meaning no inquiry shows on credit report), and that his own account was closed and he works for them! The invitation to reapply after 30 days was a slap in the face, only to be followed up by a bigger slap in the face today with another email. This one said simply that my account is not being closed, that my overdraft line of credit is restored, and sorry for the mistake. No explanation, no reassurance that in a few days I won’t get yet another email saying I should ignore the second email, or that in 60 days my account will come under review and may be closed again. I called the number listed but it was after hours and I reached the automated service. I am so torn at this stage–I absolutely love the account but I am so frustrated with this and honestly a little nervous about relying on them!

    To all those readers out there–Anyone considering opening an EO account may want to wait until this is resolved.

  17. Harm says:

    Annoying, yes…..infuriating, even. But I
    wonder how many people had decided to screw them
    out of the overdraft amount, or, like a previous
    poster asks, how many scams they were hit with.
    I take a back seat to few when it comes to
    soaking banks for free bonus offers, but all
    above board….

  18. CF - Little Rock, AR says:

    Bill – Same thing! I’ve been with ING Direct since 2000. Because there is a wait when you transfer money from your checking to the EO account — like 3 days or so, If I had to, I’d goahead and pay a bill and it was covered by the overdraft. Once my deposit was released, it was fine. I never received an e-mail, either. I was blindsided with this. I was going to go make a deposit and pay a bill (only $35.00) like I normally do and I coulnd’t. I didn’t even get the e-mail. I was told his happened last night (Oct 10th) and I was eligable to reapply after 90 days. I’m looking at alternatives right now — anyone know anything in the US?

    Thanks.

  19. David says:

    Electric Orange is really a Checking / Credit card account in practicality. And they maintain the right to eliminate your credit limit if anything changes in your credit history (EG: buying a house). So while I think that EO is a good concept, beware of the fine print.

  20. Trent says:

    The “credit” aspect only comes into play when you overdraft – otherwise, it’s just a checking account that earns 3.5% interest (currently).

  21. 144mph says:

    3.2% as of 30-Nov-07. I guess I’m not going to sign up after all. Doesn’t seem worth the effort/risks for less than 4%.

  22. Mike says:

    I had a NetBank account for 8 years and they have just been purchased by ING Direct. I did open an ING EO account since they offered $25 for opening up one, but I have some problems with their policies:

    1. No pre-paid envelopes to mail in deposits.
    2. No checks, though I use them infrequently.
    3. They won’t take money orders or rebate checks as deposits.
    4. Require a “local” account that is linked.

    Instead, I have opened a checking account at Charles Schwab Bank and have, so far, been inpressed. Not only do they pay higher interest, they have free checks (carbon or regular), pre-paid envelopes and their bill pay system is identical to NetBank, so it was an easy transition. And they will take rebate checks, which I have about 20-30 per year.

  23. Tom says:

    Started online banking with Netbank. Opened a Savings account with ING shortly thereafter. Liked both. Was one of the first to open a EO account. Still happy. Then the FDIC closed down Netbank and sold it to ING. Now the interest is plummeting so it’s not so attractive to remain at ING. I wrote 2 paper checks in 2 1/2 years on Netbank. So no concern. What pissed me off now ING is making me link a new checking account since they swallowed Netbank.

    Where do suppose I opened one? Yep Charles Schwab. Will my money remain in a 2.65% ING account or go to the 3.01% Schwab account?

    Rest in Peace EO.

  24. Al says:

    A great idea but until American banking catches up it’s useless. One of my employers uses PAYCHEX, one of the largest payroll service companies in the US, and they refuse to accept ING’s Electric Orange as a valid bank account for direct deposit. After filling out my employer’s DD form, and providing a signed copy of the DD form available from the ING website, PAYCHEX still refused to change my direct deposit. They insist on a “personalized letter” on “bank letterhead”. When I called ING’s customer service they refused to provide such a letter … claiming they were unable to do that!

    … i.e. “the computer says no”

    A complete impasse.

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